Question Details

The company uses the cost method to account for treasury stock 



1
On May 1, Hite Corporation purchased 1,000 shares of its $10 par value common stock at a cash
price of $13/share. On July 15, 600 shares of the treasury stock were sold for cash at $15/share.
Instructions
Journalize the two transactions.

2
Werner Corporation has the following stockholders' equity accounts on January 1, 2008:
Common Stock, $10 par value ............................................ $1,500,000
Paid-in Capital in Excess of Par ........................................... 200,000
Retained Earnings ................................................................ 500,000
Total Stockholders' Equity .............................................. $2,200,000
The company uses the cost method to account for treasury stock transactions. During 2008, the
following treasury stock transactions occurred:
April 1 Purchased 9,000 shares at $16 per share.
August 1 Sold 3,000 shares at $18 per share.
October 1 Sold 3,000 shares at $15 per share.
Instructions
(a) Journalize the treasury stock transactions for 2008.
(b) Prepare the Stockholders' Equity section of the balance sheet for Werner Corporation at
December 31, 2008. Assume net income was $110,000 for 2008.



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